Thursday, October 25

War is Hell - The Screw-up of the Sweaters

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By Art Cashin

On this day in 1854, there occurred one of those unique feats of stupidity, bravery and confusion that the world so cherishes.  It happened during the Crimean War and thanks to Lord Tennyson it is remembered as "The Charge of the Light Brigade." But when we studied the event (and the poem) back in the sixth grade, we tended to call it the screw-up of the sweaters.

As you recall from your sixth grade, the Russians were trying to disrupt the siege of  Sebastopol by attacking the Brits at Balaclava.  The Brits managed to fight off the attack.  Then the Brit commander, Lord Raglan (inventor of sweater that has sleeves going up to the collar), saw the Russians and their allies trying to evacuate some cannon on the nearby right flank. He sent a message to his aide, Lord Lucan, to dispatch a small force to capture those guns. When the messenger arrived, the combination of fog and battlefield smoke was so heavy that Lucan could not see the nearby guns in question.  In fact, the only guns he could see were the main Russian battery at the far end of the valley.

Maybe due to the fog and smoke, Lucan failed to note that whatever group he might send toward that Russian battery would have to march, walk or ride through a 1 1/2 mile valley with enemy artillery and sharpshooters on either side.  It was the kind of hopeless situation that in a less politically correct environment might have inspired Lucan to say - "I'd only send my mother-in-law in there."

As you recall from sixth grade, during this period of the British Empire, mother-in-laws were restricted from joining the 5th Dragoons, the 4th Hussars or even the Light Cavalry.  So Lucan turned to the next best thing - his brother-in-law, who was, of course, Lord Cardigan (inventor of sweater that buttons up front). Lord Cardigan (having no in-laws present to order about) turned to his men, the men of the Light Brigade.

Some 607 strong, armed only with sabers, they looked down the long valley, bordered and fronted by artillery and snipers and realized something man has always known - "management" is the ultimate one word oxymoron. They then tried doing that silly thing that decent, competent plain folk often do - make a dumb management plan actually work. They began riding toward the objective.

The Russians and their allies on either side of the valley began to aim their cannon.  Then the Light Brigade upped its pace forcing the cannons to be re-aimed before they could be fired.  Then an even faster pace and again a re-aiming.  Now a full gallop and close to the guns.  The Russians grow panicky and begin firing wildly.  This confuses the main Russian battery into whose face the Brigade is charging.  They begin to flee and the Brigade captures the guns (after suffering only 20% casualties).

That brings us to flaw #2 in the management plan.  These brave resourceful guys have captured a lot of cannon 1 1/2 miles behind enemy lines...they only have sabers and they have no horses to pull the cannon back even if they wanted to try such a suicidal thing. But the Russians began to panic further and sent a large force of cavalry and lancers to attack the Light Brigade.

The Brigade fought back and actually began to make deeper inroads.  Now the Russians really panicked  and began firing grapeshot, cannonballs and everything else...indiscriminately killing their own men along with the Brigadiers.  So the Brigade headed back toward headquarters for more savvy management advice...of course the only route was, as you recall, that 1 1/2 mile valley of withering crossfire.  Along the way, they scooped up their wounded from the ride in.  When they got back, they asked for new orders.

The whole thing took just 25 minutes.  Of the 607 men only 198 made it back having had 475 horses shot out from under the Brigade in the charge.

To mark the day, try developing some strategic plans.  And, remember it all might have worked if only Lord Turtleneck was there.

Comments on this piece are welcome.

About the Author

Many thanks to Mr. Cashin and UBS Financial Services who graciously allow his historical musings to be republished on this site. To enjoy more of Art's posts simply click on "Cashin's Comments" in the label section on the sidebar.

Wednesday, October 24

Lawn Chair Larry, Mach Man, and the Queen of the Mist

Today's story comes to us from a guest writer. But don't fret, we only allow the very best writers to be published here. After all, we have high standards to maintain and can't let just anyone stumble in off the virtual street and start banging out historical accounts without checking out their credentials.

As it turns out the author has great skills as a litterateur. She is also genetically qualified by virtue of being one of my wonderfully talented offspring. Which only proves that even a rotten tree can produce some terrific apples.

The following article will be published this morning on the Cecil County Library site and has been edited somewhat to fit our genre and to remove some information of interest only to patrons of that institution.

By Leah Youse

When I heard that a man would free-fall from the edge of outer space in order to break the sound barrier, my first reaction was that we had another Lawn Chair Larry on our hands.

“Lawn Chair Larry” Walters was a Californian who strapped 45 weather balloons to his patio lounger, dubbed it Inspiration I, and attempted to fly 30 feet above his home. Once he reached 16,000 feet, I think he was mighty thankful for that Miller Lite and sandwiches he prepared for his leisure cruise.

Now, I’m not a scientist, but even I can see that his landing strategy – shooting the balloons with a pellet gun – was a bad one. Fortunately for him, he didn't quite meet the qualifications for the Darwin Awards.

But no, Felix Baumgartner – who I affectionately refer to as “Mach Man” – was no Lawn Chair Larry. Every angle and precaution was taken when he took the plunge from a helium balloon just two Sundays ago. Diving 23 miles and reaching 833.9 mph, he made history: the first man to create a sonic boom without being inside an aircraft. If you missed the live video feed on the internet, check out YouTube for a replay. It’s mind blowing.

But today we celebrate the anniversary of another bold dive. Today, 111 years ago, on her birthday, a 63-year-old named Annie Edson Taylor made a name for herself – “The Queen of the Mist” – when she decided to improve her station in life with a feat of daring. Annie plunged down Niagara Falls in a corked, 160-pound barrel and lived to tell the tale, though the achievement arguably gave her a bigger headache than bank account.

Even though she lived the best part of another twenty years, she never had much financial success cashing in on her stunt. And even she figured out it hadn't been worth the risk. She later made a statement to the press  advising others against a similar scheme. She said, "If it was with my dying breath, I would caution anyone against attempting the feat... I would sooner walk up to the mouth of a cannon, knowing it was going to blow me to pieces than make another trip over the Fall."

It was advice most people were never in need of. Except maybe "Lawn Chair Larry" and the "Mach Man."

Monday, October 22

Aim High in Case You Flop

By Grant Davies

On this day (-2) in 1968, a guy named Fosbury flopped spectacularly. In fact, his flop was bigger than any that had previously been recorded in history. In Olympic history anyway.

His name was Dick Fosbury and he was in Mexico City to see if he could jump over a bar that was set higher than it had ever been set before in an Olympic high jump event.

The bar was set 7 feet 4 1/4 inches from the ground and Dick sailed over it to set a new record. Actually, he flopped over it rather than sailed, and there is a significant difference. At least there was back then.

When Dick was back in high school he sucked at the high jump event, but he had an acumen for physics and wasn't afraid to try something new in order to beat his teammates. So instead of doing the conventional "scissor kick" technique that everyone else was being taught, he tried out his own approach.

He decided to experiment, and after trying a few things he settled on perfecting one method. He described it to others this way; "I take off on my right, or outside, foot rather than my left foot. Then I turn my back to the bar, arch my back over the bar and then kick my legs out to clear the bar." He added, "from a physics standpoint, it allows the jumper to run at the bar with more speed and, with the arch in your back, you could actually clear the bar and keep your center of gravity at or below the bar, so it was much more efficient." He was a pretty smart kid.

His style was described derisively by one writer as a "fish flopping in a boat", and by another  as "a guy falling off the back of a truck." One guy even said it looked as if he was having a seizure when he did it.

Other jumpers who witnessed it early on never thought very much of it. That is, until he started to jump higher than them. Funny how that can change a competitor's mind. (It's said that other people were experimenting with similar type moves around the same time, but history doesn't record their names, so screw 'em. History is harsh and life's a bitch.)

After winning the gold medal using his old high school and college technique very few people ever went back to the old way of doing it again. In fact almost every elite jumper has used his method since then and no one has ever won the gold using anything else since 1980.

So if you are having trouble competing at anything and someone makes fun of you for trying something different, just flip them off and tell them you would be happy to have your idea flop, just like Fosbury's did.

Source material - and Wikipedia.

Friday, October 19

The Crash of '87

Editor's foreword:

Unlike most of the posts here, the following story describes an event that many/most of us were alive to witness. Or at least, we were alive at the time. Because to say most people "witness" things that happen during their life is to assume they were actually paying attention to something other than the personal details of their ordinary lives.

But some folks can say something like "I was actually at the ballpark when so and so pitched that perfect game." Of the following account, many of the folks my age who worked on trading floors of stock exchanges or busy trading rooms in brokers offices can say, "I was there when the stock market crashed in '87."  And I'm one of them.

When you "witness" something of that magnitude, your account of it depends somewhat on where you were sitting in the "ballpark" at the time. My story of what happened at my firm, G A Davies & Co. on the floor of the Chicago Stock Exchange on that day is fascinating. At least to me and the others who went through it, but it would be boring to most outside the securities industry.

Not so for the account of Arthur Cashin on the same event. He had a different seat than I did. Exchange wise and perspective wise. That is why his account of the events appears below instead of mine. However, I will conclude this foreword with one memory that I will never forget and which I think wraps up the consequences of the event rather tidily.

Our firm had lots of clients, ranging from small self-financed market makers, to large mega brokerage houses,  to big individual traders. The biggest trader we represented was a friend as well as a client. He was arguably the biggest stock and options trader in Chicago. His trading badge acronym was STA. (You insiders know his name.)  And like most good traders on that day his goal was not profit, it was survival.

After the incredible events of the day had concluded I had an opportunity to talk to him briefly after the close of trading. I asked him the following question. "John, are you okay?" His answer was memorable because it indicated that he had achieved what everyone was striving for. He said, "Well, I lost a bunch of money, but I have a bunch left."

And so we survived. As individuals, as financial institutions, as companies, and as a country. So enjoy Mr. Cashin's account and always remember; since the dawn of history man's biggest goal has been merely to survive. The stories of success and failure are not the norm, they are the exception. Which is why we recount them here.     Grant Davies

By Art Cashin

On this day in 1987 (that's 25 years ago, if you are burdened with a graduate degree), the NYSE had one of its most dramatic trading days in its 220 year history.   It suffered its largest single day percentage loss (22%) and its largest one day point loss up until that day (508 points).  No one who was on the floor that day will ever forget it.

While it was an unforgettable single day, there were months of events that went into its making. The first two-thirds of 1987 were nothing other than spectacular on Wall Street.  From New Year to shortly before Labor Day, the Dow rallied a rather stunning 43%.  Fear seemed to disappear.  Junior traders laughed at their cautious elders and told each other to "buy strength" rather than sell it, as each rally leg was soon followed by

One thing that also helped banish fear was a new process called "portfolio insurance".  It involved use of the newly expanded S&P futures.  Somewhat counter-intuitively, it involved selling when prices turned down.
The rally topped out about August 25 th with the Dow hitting 2722.  Interest rates had begun creeping up amid concerns of early signs of inflation.  Treasury Secretary Baker began a rather open debate with the Germans on the relationship of the dollar and the Dmark.  Soon the weakness in the market was turning into a visible correction.

By the middle of October, the Dow fell to break an uptrend line that had protected it for over 1000 points.  The flurry of takeovers and leveraged buyouts that had flourished all year began to dry up. On Wednesday, October 14th, there were widely discussed rumors of a new punitive tax on takeover profits.  Selling turned a bit ugly and the Dow fell 96 points by the close (a record point drop at the time).  The next day there was no bounce and the Dow fell another 58 points.

Friday, the 16th was an option expiration day.  There was a very bad storm in London and that market closed, which forced more people to seek liquidity in New York.  Stocks faced a steady wave of selling.  As the close neared, rumors spread that the First Lady, Nancy Reagan, the President's right hand, might be admitted to the hospital with cancer.  The selling intensified and the Dow closed down 108 points, on
the low and a new record point drop.

The weekend was a rumormonger's delight.  Nancy was admitted to the hospital.  Japan was considering a confiscatory 96% tax on real estate speculation.  Germany proposed a change in taxes on some interest rates, which would make U.S. Treasuries unattractive to Germans.  Rep. Gephardt was talking about a trade bill that would freeze imports.  Treasury Secretary Baker went on a Sunday talk show and openly challenged the Germans on currency.  There were even rumors of U.S. planes engaging Iran.

At the time, I was running the floor for PaineWebber.  Monday morning I got up well before dawn and saw that Hong Kong was down about 10% and other markets were looking equally weak before their openings.  I headed for the NYSE to check on our systems and staffing.  I reached out asking the team to get in early.
Once I had checked out the systems and verified staffing, I went with a partner up to the Luncheon Club for a quick coffee. With markets around the globe all down about 10%, I didn’t know if we’d get to a coffee – or anything else after we opened. We sat about two tables away from a table where NYSE Chairman John Phelan sat with several directors and some staff.  Every ten minutes or so, someone would rush up to Phelan and slip him a note or whisper in his ear.  It was evident that things were deteriorating.  As I headed for the floor, I went past Phelan's table, put my right arm across my chest and said – "Nos Morituri Te Salutamus Esse".  It was the gladiator's salute to the Emperor – "We, who are about to die, salute you".  Phelan nodded without a smile.

The opening was not an outright disaster, but that was primarily due to the fact that many stocks did not open immediately.  They were delayed, with indications to warn investors of the prices that they might open at (with hopes of inviting bargain hunters).  Meanwhile, in Chicago, where you could short without a plus-tick, prices headed for freefall.  Soon prices were lower in Chicago than in New York.  That brought even more selling pressure to New York.

Shortly after the opening, as it became clear that this would be a very special and very dangerous day, several NYSE directors met in Chairman Phelan's office.  They checked around the street to gauge any new trends in the selling pressure.  They were also on the phone with the White House via former Senator Howard Baker, who was White House Chief of Staff.

Meanwhile, back on the floor, the situation felt more unreal.  Orders flowed in faster and faster and the tape ran later and later.  (The tape was linear and the human eye can only recognize a certain number of symbols per second, 900 I think.  To run faster than that would make the tape an unreadable blur.  Traders can trade faster than the maximum reading speed – so the tape ran late.)  One broker said it was like a bizarre dream sequence – nothing seemed real.

In late morning there were signs that the markets might begin to stabilize.  Then the newly appointed Chairman of the SEC, David Ruder, was intercepted by reporters leaving a meeting at the Mayflower Hotel in Washington.  Whatever they asked and whatever he said, it somehow was reported that the markets might have to be halted.  Later, he would swear it was a typo but you can't un-ring a bell. The fear of a halt sent buyers scurrying away.  Stocks went into virtual freefall.

The interaction with the futures saw prices melt away.  The Dow closed down 508 points.  One specialist, who made too good a market, ran out of funds and the firm was sold to Merrill Lynch that very night.  At watering hole after watering hole, traders and specialists reported again and again how strained their resources were.  Wall Street could not survive another day like this.  Luckily, innkeepers, like Harry let them put the drinks on a tab.

What is often lost in the retelling is that the next day, Tuesday, was far more dangerous.  It was the day that the wheels almost did come off the locomotive. The Dow opened up about 200 points Tuesday to a round of cheers on the floor. But, stocks quickly turned lower.  The 200 point gain was erased and the Dow went negative, accompanied by an audible gasp on the floor.  Soon it was nearing -100 and trading was being halted in several of the Blue Chips that make up the Dow.

Then we learned that several key banks were shutting down the credit lines of market makers and NYSE specialists.  The banks feared exposure to an apparently collapsing stock market. NYSE Chairman Phelan reached out to the recently appointed head of the Fed, Alan Greenspan.  Unfortunately, Greenspan was on a plane.  Desperate, Phelan called the President of the New York Fed, Gerry Corrigan.  He sensed the danger immediately and began calling the banks to reopen the credit lines.  They were reluctant but Corrigan ultimately cajoled them.  The credit lines were reopened and the halted stocks were reopened.  Best of all, the market started to rally and closed higher on the day.

It was an incredible time and the financial system was within hours (and a few phone calls) of an absolute collapse.  It was a time I'll never forget.

Many thanks to Mr. Cashin and UBS Financial Services who graciously allow his historical musings to be republished on this site. To enjoy more of Art's posts simply click on "Cashin's Comments" in the label section on the sidebar.

Wednesday, October 17

Winning at Saratoga Without Going to the Track

By Art Cashin

On this day in 1777, British Forces under "Gentleman" Johnny Burgoyne surrendered to American Forces in Saratoga turning the tide of the Revolution.  The victory could not have come at a more important time.  To the south near Philadelphia, George Washington was losing battles daily - at places called Germantown and Brandywine.

The Continental Congress was forced to flee Philadelphia under threat of capture.  There was even a move afoot to remove Washington as commander.  (What would the dollar bill look like?)

Then came the news of the victory at Saratoga.  The Americans accepted the surrender of nearly 6000 crack British and Hessian troops.  Not only did the victory re-spark morale - it enabled Ben Franklin to convince France to throw in with the revolutionaries - thus providing fresh ships and supplies.

And, as word of the victory spread through the colonies, a new hero was born.  A field commander, a brilliant leader and tactician, who was wounded in his courageous move that turned the tide of the whole Revolution, the man who saved the battle and the Revolution - why it was that famous American patriot - Benedict Arnold.

Many thanks to Mr. Cashin and UBS Financial Services who graciously allow his historical musings to be republished on this site. To enjoy more of Art's posts simply click on "Cashin's Comments" in the label section on the sidebar.

Editors note - For more about Benedict Arnold you can read our recent post, A Rotten Egg - Benedict Style.

Monday, October 15

Spying on Margaret

By Grant Davies

On this day in 1917, it all ended badly for Margaretha Zelle. She was made holy, or more correctly, full of holes, by a French firing squad. She went to her reward with eyes wide open, literally, because she bravely refused the blindfold she was offered.

Margaretha was a Dutch girl who came from Holland to France in 1905. Once there she changed her persona to that of a Malaysian beauty who had been born in an Indian temple and was taught how to perform ancient dances by a high priestess.

It was a great story and she quickly made a name for herself by dancing to packed houses of men anxious to expand their knowledge of exotic foreign cultures. She named herself Mata Hari. It was a nice touch.

But the truth was the men came to watch her dance out of her clothing. You see, she was a stripper and naked women never go out of style among such audiences. She performed all across Europe.

She also did performances of a different kind to audiences of one. She became a courtesan, which is a fancy word for a hooker who has wealthy clients. And by the time the war to end all wars was heating up she had quite a number of high ranking military officers on her list of Johns.

It seems they whispered a number of military secrets to her while she was whispering sweet somethings into their ears. So she expanded her product line to include espionage, selling info (mostly of the useless variety) to both the Germans and the French. I'm told that can get you into trouble.

So with the war going badly for everyone, and both sides discarding most of what she told them as unreliable, she became a convenient scapegoat the French could use to distract the populace from focusing on the fact that hardly anyone was coming home from the front, except in a box. So they had her arrested and convicted, and they filled her full of holes.

It's hard to guess what she might have been thinking when she refused the blindfold. It may be her final thought was that when you make your living giving people an eyeful, you don't want to miss a thing at your final performance.

Thursday, October 11

Money by the Cartload

Editor's note - The regular readers of this blog are used to short missives on subjects of general interest, but very little gravity. Today's post is somewhat longer and of great topical importance. I hope you enjoy it, although "enjoy" is not a word I would normally associate with a story such as this. So let's just settle for my hope that you find it enlightening. And perhaps just a tad terrifying. Because as the saying goes, "Those who are ignorant of history are..blah, blah, blah."

By Art Cashin

Originally, on this day in 1922, the German Central Bank and the German Treasury took an inevitable step in a process which had begun with their previous effort to "jump start" a stagnant economy.

Many months earlier they had decided that what was needed was easier money.  Their initial efforts brought little response.  So, using the governmental "more is better" theory they simply created more and more money.  But economic stagnation continued and so did the money growth.  They kept making money more available.  No reaction.  Then, suddenly prices began to explode unbelievably (but, perversely, not business activity). So, on this day government officials decided to bring figures in line with market realities.  They devalued the mark.  The new value would be 2 billion marks to a dollar.

At the start of World War I the exchange rate had been a mere 4.2 marks to the dollar.  In simple terms you needed 4.2 marks in order to get one dollar.  Now it was 2 billion marks to get one dollar.  And thirteen months from this date (late November 1923) you would need 4.2 trillion marks to get one dollar.  In ten years the amount of money had increased a trillion fold.

Numbers like billions and trillions tend to numb the mind.  They are too large to grasp in any “real” sense.  Thirty years ago an older member of the NYSE (there were some then) gave me a graphic and memorable (at least for me) example.  “Young man,” he said, “would you like a million dollars?”  “I sure would, sir!”, I replied anxiously.  “Then just put aside $500 every week for the next 40 years.”  I have never forgotten that a million dollars is enough to pay you $500 per week for 40 years (and that’s without benefit of interest). To get a billion dollars you would have to set aside $500,000 dollars per week for 40 years.  And a…..trillion that would require $500 million every week for 40 years.  Even with these examples, the enormity is difficult to grasp.

Let’s take a different tack.  To understand the incomprehensible scope of the German inflation maybe it’s best to start with something basic….like a loaf of bread. (To keep things simple we’ll substitute dollars and cents in place of marks and pfennigs. You’ll get the picture.)

In the middle of 1914, just before the war, a one pound loaf of bread cost 13 cents.  Two years later it was 19 cents.  Two years more and it sold for 22 cents.  By 1919 it was 26 cents.  Now the fun begins.

In 1920, a loaf of bread soared to $1.20, and then in 1921 it hit $1.35.  By the middle of 1922 it was $3.50.  At the start of 1923 it rocketed to $700 a loaf.  Five months later a loaf went for $1200.  By September it was $2 million.  A month later it was $670 million (wide spread rioting broke out).  The next month it hit $3 billion.  By mid month it was $100 billion.  Then it all collapsed.

Let’s go back to “marks”.  In 1913, the total currency of Germany was a grand total of 6 billion marks.  In November of 1923 that loaf of bread we just talked about cost 428 billion marks.  A kilo of fresh butter cost 6000 billion marks (as you will note that kilo of butter cost 1000 times more than the entire money supply of the nation just 10 years earlier).

How Could This All Happen? – In 1913 Germany had a solid, prosperous, advanced culture and population.  Like much of Europe it was a monarchy (under the Kaiser).  Then, following the assassination of the Archduke Franz Ferdinand in Sarajevo in 1914, the world moved toward war.  Each side was convinced the other would not dare go to war.  So, in a global game of chicken they stumbled into the Great War.

The German General Staff thought the war would be short and sweet and that they could finance the costs with the post war reparations that they, as victors, would exact.  The war was long.  The flower of their manhood was killed or injured.  They lost and, thus, it was they who had to pay reparations rather than receive them.

Things did not go badly instantly.  Yes, the deficit soared but much of it was borne by foreign and domestic bond buyers.  As had been noted by scholars…..“The foreign and domestic public willingly purchased new debt issues when it believed that the government could run future surpluses to offset contemporaneous deficits.”   In layman’s English that means foreign bond buyers said – “Hey this is a great nation and this is probably just a speed bump in the economy.”  (Can you imagine such a thing happening again?)

When things began to disintegrate, no one dared to take away the punch-bowl.  They feared shutting off the monetary heroin would lead to riots, civil war, and, worst of all communism.  So, realizing that what they were doing was destructive, they kept doing it out of fear that stopping would be even more destructive.

Currencies, Culture And Chaos – If it is difficult to grasp the enormity of the numbers in this tale of hyper-inflation, it is far more difficult to grasp how it destroyed a culture, a nation and, almost, the world.

People’s savings were suddenly worthless.  Pensions were meaningless.  If you had a 400 mark monthly pension, you went from comfortable to penniless in a matter of months.  People demanded to be paid daily so they would not have their wages devalued by a few days passing.  Ultimately, they demanded their pay twice daily just to cover changes in trolley fare.  People heated their homes by burning money instead of coal.  (It was more plentiful and cheaper to get.) The middle class was destroyed.  It was an age of renters, not of home ownership, so thousands became homeless. But the cultural collapse may have had other more pernicious effects.

Some sociologists note that it was still an era of arranged marriages.  Families scrimped and saved for years to build a dowry so that their daughter might marry well.  Suddenly, the dowry was worthless – wiped out.  And with it was gone all hope of marriage.  Girls who had stayed prim and proper awaiting some future Prince Charming now had no hope at all.  Social morality began to collapse.

The roar of the roaring twenties began to rumble. All hope and belief in systems, governmental or otherwise, collapsed.  With its culture and its economy disintegrating, Germany saw a guy named Hitler begin a ten year effort to come to power by trading on the chaos and street rioting.  And then came World War II.

We think it’s best to close this review with a statement from a man whom many consider (probably incorrectly) the father of modern inflation with his endorsement of deficit spending.   Here’s what John Maynard Keynes said on the topic:  By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens.  By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some…..Those to whom the system brings windfalls….become profiteers. To convert the business man into a profiteer is to strike a blow at capitalism, because it destroys the psychological equilibrium which permits the perpetuance of unequal rewards.

Lenin was certainly right.  There is no subtler, no surer means of over-turning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose….By combining a popular hatred of the class of entrepreneurs with the blow already given to social security by the violent and arbitrary disturbance of  contract….governments are fast rendering impossible a continuance of the social and economic order of the nineteenth century.

To celebrate have a Jagermeister or two at the Pre Fuhrer Lounge and try to explain that for over half a century America's trauma has been depression-era unemployment while Germany's trauma has been runaway inflation.  But drink fast, prices change radically after happy hour.

And, tell Fed. Chairman Bernanke that it was the “German Experience” that caused many folks to raise an eyebrow when he alluded to the power of the “printing press” a few years ago.  It is why so many, including some of the FOMC, express concern about unintended consequences of each new wave of quantitative easing.  (And, if you think no government would ever sponsor wild inflation to liquidate its debt, take a look at Zimbabwe.)

Many thanks to Mr. Cashin and UBS Financial Services who graciously allow his historical musings to be republished on this site. To enjoy more of Art's posts simply click on "Cashin's Comments" in the label section on the sidebar.

Monday, October 8

Today is History

On this day (-2), in this very year, the editor of this cheeky blog received an email from a reader. Her name is Erica and she is a Go-Go dancer from Indianapolis.

Alright, that last part isn't true. But the site she asked me to plug for her "hysterical" cause is called indiegogo, so I thought, what the heck, go for it.

As it turns out, she is a comedian, so she's hoping her idea is hysterically funny, but it's really more historically funny, or at least it's about history. As it also turns out she likes the comical aspects of our little historical stories. It seems that our irreverent and occasionally chucklesome treatment of historical events is right up her alley because her small group of troupers is trying to achieve the same thing we are doing here at Cheeky History.

The venue is different of course. They are trying to make a pilot episode of a TV program to pitch to various producers so they can bring more people to the historical table using a little levity. And as we all know, the world's level of levity leveled off a long time time ago.

The show would be called "Today is History" and I haven't the slightest idea as to whether it will ever get made or not, but when it comes to new ideas, I'm pretty good at not having the slightest idea.

So if you want to find out more about the whole process, you can visit their fund-raising site. If she gets famous and successful she promises to mention Cheeky History to every single person she ever meets so we can be famous and successful, too.

Maybe they will even take out an ad on our site since I gave them this one for free to get them started.

Tuesday, October 2

From Goat to Hero in One Swing

Baseball history back to back? It's that time of year! And Art and I are on the same page. Think of it as a "home and home" series. Yesterday it was my story about Babe Ruth's "called shot" and today it's Art's about Bobby Thompson's "Shot heard 'round the world."

Image courtesy of the NY Post

By Art Cashin

On this day (+1) in 1951, a very unique event occurred.  Er...... Make that a spectacular event.  Oh. Hell!  Before I run out of paper and adjectives let me simply quote what the great writer Red Smith said about it the day after it happened.

"Now it is done.  Now the story ends.  And there is no way to tell it.  The art of fiction is dead, reality has strangled invention.  Only the utterly impossible, the in-expressively fantastic, can ever be plausible again....."
The event was a baseball game.  More correctly "the" event was how the game ended.

If you had reached the age of reason by A.D. 1951 you probably know what it was, particularly if you lived east of the Mississippi and if you are short in the soul department you probably call it "Bobby Thomson's Home Run". But if you know about epics and heroes and miracles and tragedies it was something special and you may never forget it. A visit to the library might tell you that it was a special pennant race.

The Giants had lost 11 in a row in April and wallowed  way back in the pack.  Duroucher moved Thomson to 3rd and replaced him in centerfield with a kid named Willie Mays.  The Giants played okay ball thereafter but lagged their arch-rivals, the spectacularly talented Dodgers.  In mid-August they were 13 1/2 games behind the "Bums."

Then the miracle started.  The Giants won 16 games in a row with Thomson [the Flying Scot] a key factor.  In the final week they caught the Dodgers and forced a playoff.  The Giants won the first of 3 by a score of 3-1.  The Dodgers answered with a 10-0 drubbing.  Thus the stage was set for great drama.

Game three - - all about America and baseball.  In the 1st inning, Jackie Robinson singled in a run.  Dodger's up 1.  Then in the 2nd inning, Thomson sends a drive into left and tries to stretch it to a double. Unfortunately, when he reaches 2nd, he finds it already occupied by his teammate Whitey Lockman.  Thomson is tagged out in a chorus of boos.

In the 7th, the Giants manage to tie the game.  But in the 8th the Dodgers pull ahead 4-1 on a couple of hits and lots of sloppy fielding by Thomson.  As the inning ends, boos, thrown beer cups and a lynch mob are looking for Thomson as he heads for the dugout.

Finally, the last of the 9th, in a hopeless situation.  But, Al Dark singles, Don Mueller hits a grounder just past Hodges and the  stands come alive.  Dodger manager, Dressen checks on his pitcher Don Newcombe but leaves him in to face the cleanup hitter, Monty Irvin.  Irvin pops out.  But Lockman doubles down the left fieldline sending home Dark but causing Mueller to sprain his ankle sliding into 3rd.  As the stretcher came out for Mueller, Dressen went to the bullpen - - for his ace, Ralph Branca even though he had pitched a full game just 2 days ago.

Thomson was the batter and there was a smattering of boos as he stepped to the plate.  On deck was the whiz kid Mays (who had struck out and hit into a double play) but why put the winning run on base.  So Branca pitched to Thomson. The first pitch was a sizzling strike right over the plate.  The second probably should have been a ball but Thomson stepped back in the bucket and hit a high inside fast ball in a huge arc toward left field.  The fans, the broadcasters and even Andy Pafko the Dodger left-fielder watched in amazement as the ball cleared the Polo Grounds wall by 18 inches (just above the 315-foot mark).

For the next 50 years, this event would pale other great deeds in the American male psyche.  Goats as heroes.  Heroes as goats.  Logic a victim of legend.  Homer and Shakespeare would have loved it.  And Thomson might have become the eternal symbol of the Giants - - but they traded him two years later.

To celebrate, stop by the Bottom of the Ninth.  Have a couple of sliders and tell the Rookie on the stool next to you that baseball is like Wall Street.  Here too there are chances to redeem yourself.  Here too you can become an instant legend even a national/hero - - provided you don't strike out at a critical moment.

Editors note: Art likes baseball, sometimes he even plays it. 

Many thanks to Mr. Cashin and UBS Financial Services who graciously allow his historical musings to be republished on this site. To enjoy more of Art's posts simply click on "Cashin's Comments" in the label section on the sidebar.

Monday, October 1

Babe Ruth, in the End He Was Warped

By Grant Davies

On this day in 1932, a guy named Harold Warp went to Wrigley Field to see the only big league ball game he ever attended.

The game was a World Series game between the Chicago Cubs and the New York Yankees, and just for the record, the Cubs lost. Or the Yankees won, as you prefer. It was a notable game for quite a few reasons, the Cubs loss not being one of them.

It was game three of a four game sweep by the Yanks and Harold was lucky to pick this one for his only trip. Just for fun he brought his movie camera with him to record some of the action. As it turned out some of the action he caught on film was historic, and valuable. The film clip was sold to ESPN in the year 2000, presumably for a tidy sum, particularly in 1932 dollars.

The film may not have shown the first pitch to Lou Gehrig in the fifth inning as it got drilled into the right field seats for his second home run of the game. But it did show the pitch right before that which ended up sailing into history before ending up in the center field seats. That one (also his second of the game) was hit by a guy you may have also have heard of, George H. Ruth. It ended up as one of the most famous shots in sports legend because the Babe "called it" by pointing to center field just before he took his historic swing.

Umm, or maybe not. The Babe made a gesture, that part is certain. But what he was pointing at, and why, remains one of the most debated events in a sport that sometimes seems more debate than sport.

As the story was retold, by the Babe himself and others, there was an inordinate amount of jawing going on between Ruth and the Cubs bench. Lots of gestures were made by the Babe toward them, and maybe the pitcher, Charlie Root, during the "at bat." Root had run the count to two and two and the hometown crowd was hugely agitated by the possibility of Babe striking out. But after two called strikes and a lot of verbal abuse from the dugout, failure was the last thing on Babe's mind.

That's when Ruth made a gesture with his finger (no, not the middle one), for the second or third time during the encounter. One respected baseball writer of the time, Joe Williams, took it as bold prediction by Ruth and wrote it that way the next day in his widely read column. He was initially the only one who mentioned it, and it's certain that he knew a good story when he wrote it.

Ruth also was tuned into the potential such a tale would add to his mystique, so when asked about it later he merely said, "It's in the papers isn't it?" Which is a tad different than what he told a reporter right after it happened. At that time he said that "he was merely pointing towards the Cubs dugout to tell them he still had one more strike." He told another interviewer he "did not point to any particular spot, but that he just wanted to give the ball a good ride." As time went by he seems to have bought into his own hype and the story grew as he claimed that he did indeed call his shot.

For his part, the pitcher Root, always claimed the whole thing was bogus. He was known as a pretty tough guy in his own right and told a reporter "Ruth did not point at the fence before he swung. If he had made a gesture like that, well, anybody who knows me knows that Ruth would have ended up on his ass. The legend didn't get started until later."*

The film clip from the Harold Warp movie seems to make it pretty clear to most observers that the Babe wasn't pointing to center field after all. I guess it depends on the angle from where you are sitting at Wrigley Field. The only thing for certain about the issue is that it will never be resolved to the satisfaction of everyone. But for the skeptical (perish the word "cynical") among us, the story of how it became a story is at least as good as if it had happened according to the script.

So, (as Art Cashin might wind up a tale such as this), to celebrate the controversy, stop by the Cubby Bear Tavern and hoist one to the "Bambino." But be careful not to drink so much that you get "Warped" along with Babe's famous story.

* Most of the information for this story, and all of the quotes, was taken from the Wikipedia entry on the subject. And if it's on Wikipedia, it's always correct. Well, as least as correct as the "Called Shot" story itself.
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